RBS and NatWest hike overdraft fees
RBS and NatWest have become the latest banks to hike overdraft charges – and the new pricing structure means some customers will pay double the rate of interest.
Here’s what’s changing and when:
Between late March and early April 2020 (the exact date depends on which account you hold), RBS and NatWest will hike overdraft rates to 39.49% EAR.
They will also scrap the £6 arranged overdraft and £8 unarranged overdraft fee and the £10 – £500 interest-free buffer.
The banks currently charge 19.89% for overdrafts, so some customers will see their interest rate almost double.
For unarranged overdrafts, monthly charges will be capped at £20 down from £80.
Graduate account holders will continue to benefit from their up to £2,000 buffer.
There’s no change for student account holders who will continue to pay a maximum £2.75 a month for going into an unarranged overdraft.
A spokesperson for NatWest said three out of four customers with an arranged overdraft will pay less, or the same.
She said: “We have undertaken extensive customer research and have created an overdraft proposition that is simpler and easier for customers to understand.
“The majority of our customers, who use their overdraft, will pay the same or be better off as a result of these changes. We’ve been working hard to make sure we have the right support in place for any customers who are negatively impacted by these changes.”
RBS and NatWest follow a growing list of banks responding to new rules from the Financial Conduct Authority (FCA) relating to overdraft charges.
From April 2020, banks and building societies will be required to stop charging customers higher prices for unarranged overdrafts in comparison to arranged overdrafts and they will not be allowed to charge fixed daily or monthly overdraft fees.
So far, Nationwide, HSBC, First Direct, M&S Bank, Monzo and Starling have all hiked their arranged overdraft fees.
Experts said that the overdraft fee hikes are an undesirable side effect of the regulator’s rules, adding that it’s only a matter of time before other banks follow suit.